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CONCORD — The state Senate is giving preliminary approval to a business-funded scholarship program to send students to private or out-of-district public schools.

The Senate voted 15-9 in favor of the program, which would give businesses a tax credit equal to 85 percent of their donations.

The money would be funneled through scholarship organizations, which would provide scholarships averaging below a $2,500 limit to start but would be adjusted annually. Home-schooled children could receive one-fourth of that limit for educational expenses.

Sponsor Jim Forsythe, a Strafford Republican, said his focus is on creating choice and educational opportunities.

"I support public education, and I think all of us do. But I support education — period — no matter how it's delivered, and this bill does that," Forsythe said Wednesday.

Unlike voucher programs, which take money directly out of a school district to be used for tuition elsewhere, the tax credits would affect revenue before it reaches state coffers.

The total amount of tax credits for businesses could not exceed $6.8 million the first year, but after years when at least 80 percent of available credits had been used the limit would increase by 25 percent.

Forsythe said the loss of this revenue would be offset by savings in the students' district from having fewer students and a decrease in the number of state adequate-education grants.

The bill also attempts to target low- and middle-income students for the scholarships, unlike a similar bill in the House.

Opponents questioned the proposal's constitutionality and cost, but Forsythe contended similar programs were working well in eight other states.

State Sen. Molly Kelly, a Keene Democrat, said she believed the tax credit program could be construed as using state funds to pay for parochial schools, which the state constitution forbids. Kelly dismissed Forsythe's citation of an Arizona ruling on the subject, saying other states' decisions do not apply to New Hampshire.

"That's what we're talking about, New Hampshire law and New Hampshire education," Kelly said.

The bill now heads to the Finance Committee before returning to the Senate for a final vote.